CLSA said this week's uptick in global government bond yields, driven by Japan's Takaichi-led fiscal shift and renewed tariff risks, has once again brought G7 fiscal-credibility concerns to the fore. According to the brokerage, these developments are reinforcing a multi-year regime shift that began in early 2025, favouring emerging markets, world ex-US equities and commodities, while continuing to pressure G7 bonds. While the broader technical setup across regions remains constructive, CLSA cautioned that a rotational correction risk is building in the high-flying Korean equity market.
CLSA noted that despite recent volatility in global bond markets, EM sovereign bonds continue to outperform G7 government bonds, with the ratio hitting new all-time highs. The commodities versus G7 bond ratio (Bloomberg Commodity Index vs FTSE G7 Index) has broken out of its 2024–2025 base, reinforcing last year's move above the 2022–2024 downtrend channel. The brokerage remains overweight commodities and underweight G7 bonds. The continued weakness in G7 bonds is also supporting gold's uptrend, with a December breakout pointing to an upside target of US$5,100–5,200. Meanwhile, the DXY remains capped at the 99–100 resistance zone, underscoring the 2025 breakdown from its 2022–2025 major top.
In the US, the S&P 500 has pulled back below its 50-day moving average, trading back within the 6,500–6,944 range. The Russell 2000 breakout remains intact, with a long-term target of 3,600–3,620. The Magnificent Seven stocks are weakening and are at risk of breaking below the 30,019–30,099 zone. The Nasdaq-100 continues to face resistance at 26,399–26,400, with pivotal support seen at 23,900–24,000. The SOX index is in a Wave-5 advance, targeting 8,419, and remains bullish above 7,190 (50DMA).
CLSA flagged that risk-reward in the Kospi 200 is no longer attractive. After hitting its 700 upside target, the index now trades at a 17% premium to its 50DMA, with the daily RSI peaking at 87. Similar conditions preceded the July and November 2025 highs, which were followed by 6% and 11% drawdowns, respectively. CLSA expects another rotational corrective phase and recommends taking profits in extended large-cap names such as Samsung Electronics, SK Hynix, Hyundai Motor and Kia. Investors may instead rotate into laggards with more favourable risk-reward, including Posco and Hyundai Electric. In Taiwan, CLSA recommends selling Hon Hai.
The Nikkei remains bullish above its 50DMA (50,724), with an upside target of 56,100–56,200. The Hang Seng Index has broken out, targeting 28,900, with key support at its 50DMA (26,094). The HSCEI remains range-bound, with support at 8,707–8,909 intact. Hang Seng Property is up 9% YTD and is nearing a major 2025–26 basing breakout, with SHKP as CLSA's top pick. Hang Seng Tech is supported by its 50/200DMA, while KWEB remains constructive above US$33.74–34.64. The CSI300 is retesting its breakout zone at 4,726–4,761.
In Australia, the ASX200 is stalling, with support at 8,650–8,669. CLSA sees a strengthening Resources over Banks trend, with potential for 40% multiyear relative outperformance, while the banking sector is tracing a head-and-shoulders top with a downside target of 10,650.
Across Southeast Asia, the STI remains bullish above its 50DMA (4,619). Indonesia's LQ45 is a buy on pullbacks to 866–867, targeting 909–910. Malaysia's KLCI needs a rebound off 1,697–1,700 to confirm upside toward 2,000–2,030. Thailand's SET has a base breakout intact, targeting 1,429–1,430, while the Philippines' PSEi has completed an inverse head-and-shoulders breakout, with a target of 6,673 and a long-term range of 5,690–7,543.
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